FinCEN Dodge Costs Veridian Biz Member $3M

Court documents from May revealed the Department of Homeland Security seized nearly $3 million from a business account at the $2.4 billion Veridian Credit Union in Waterloo, Iowa, over what the DHS said was an unlicensed money transmitting business operated by the business member’s client.

The business member, person-to-person payment service Dwolla, keeps all its deposits at the credit union, which also hosts its transactions through the Automated Clearing House system.

Dwolla client Mutum Sigillum, a subsidiary of Japan-based Bitcoin virtual currency exchange firm Mt.Gox, was determined to be operating illegally by DHS. According to the seven-page seizure warrant filed May 14 in Maryland U.S. District Court, Mt.Gox owner Mark Karpeles told Wells Fargo while opening a business account that he did not engage in money services.

Had he replied in the affirmative to required questions asking if his firm accepted funds from customers and sent them based on customers’ instructions, he would have been required to register with the U.S. Treasury’s Financial Crimes Enforcement Network.

Court documents do not state the firm was accused by DHS of laundering money used in illegal activities or supporting terrorist activities. Instead, because the firm merely attempted transactions in violation of the registration law, DHS Special Agent Michael T. McFarland told the court the funds were subject to seizure and forfeiture. Mutum Sigillum’s funds at Wells Fargo were also subjected to a May 9 seizure warrant.